Thursday, April 13, 2017

The first-ever “physician-focused payment models” were approved this week by the federal Physician-Focused Payment Model Technical Advisory Committee (PTAC). Instead of the traditional “top-down” approach to payment reform, where Medicare and other payers design payment systems that often don’t work well for physicians or patients, PTAC was created by Congress to enable a “bottom-up” approach in which physicians can design payment models that support the kind of care they believe patients need.

Project Sonar

The first of the payment models approved by PTAC was developed by a gastroenterologist in Illinois, Dr. Lawrence Kosinski, to support better care for patients with inflammatory bowel disease (IBD). Thanks to the willingness of Blue Cross Blue Shield of Illinois to implement the model with commercially-insured patients, Kosinski has already been able to show how having a better payment system can both improve patient care and save money. Patients who have been part of the project wrote to the PTAC describing how much better their care has been, and the health plan has said that it is saving significant amounts of money because patients haven’t been hospitalized as often.

But in order for all IBD patients to benefit from this improved care, Medicare and other payers around the country also need to implement the payment changes. Moreover, although the care delivery approach has been primarily used for IBD patients so far, it has the potential to support better care for patients who have other kinds of chronic health problems that need to be monitored closely to avoid the need for hospitalization, but those patients won’t be able to benefit either unless appropriate changes are made in the payment system.

Dr. Kosinski calls what he’s doing “Project Sonar” because he needed a way to regularly “ping” his patients to find out if they were developing problems so he could intervene early rather than only finding out after a patient is so sick they have to be hospitalized. The problem is the current fee-for-service system used by Medicare and most payers doesn’t pay for proactive contacts with patients and other care management services, so a physician practice that tried to do this routinely wouldn’t be able to cover the costs. Medicare and commercial health plans pay for office visits with the physician, but only if the patient schedules an appointment; the payers don’t pay for contacting the patient by phone or email to determine whether the patient needs a visit or not. The result is that Medicare and health plans end up paying for a lot of emergency room visits and hospitalizations that could have been avoided. That’s called “penny wise and pound foolish.”

ACS-Brandeis Advanced Alternative Payment Model

The second payment model approved by PTAC is very different. It’s designed to pay a wide range of physicians more when they deliver services as efficiently and effectively as possible during “episodes” of care, rather than paying them more for delivering unnecessary services, which is what the current fee-for-service system does. Although Medicare and other payers have tried to reward efficiency through Accountable Care Organization programs, those programs haven’t been successful because they don’t provide a way to change payment for the individual physicians who are actually delivering care to patients. The payment model developed by the American College of Surgeons and Brandeis University focuses payment changes on the teams of physicians (the “Clinical Affinity Groups”) that deliver specific types of care to patients. Moreover, it ties payment to how well the patient’s specific health problems are addressed, not just on how an individual procedure is delivered. Almost all of Medicare’s current “episode” payment models are limited to hospitalizations, which means that a patient has to be hospitalized before they can benefit from better care delivery, and in most cases the episode paymemt models are focused on surgeries, which ignores patients who can be treated without surgery (e.g., using medications or physical therapy). At the same time, the ACS-Brandeis model ensures that when surgery or another type of procedure is needed, the payment for the physicians who deliver the procedure is coordinated with the payments for the physicians who manage the underlying condition both before and after the procedure is performed, rather than forcing physicians to argue about “who generated the savings.”

What’s Next

The PTAC recommended both Project Sonar and the ACS-Brandeis Advanced Alternative Payment Model for “limited scale testing.” The PTAC defined this as a specific recommendation category because in many cases, specific elements of a payment model need further refinement before the model can be implemented on a broad enough scale to fully evaluate its impact, but that refinement cannot be completed without actually putting the payment model into operation in at least a small number of physician practices. For example, in the case of Project Sonar, although the payment model has already been used successfully for commercially-insured patients with inflammatory bowel disease, it is not clear how key parameters, such as the payment amounts and the spending targets, should be set for Medicare patients who are more likely to have multiple health problems and for whom additional time and resources may be needed to support both proactive outreach and coordination with other physicians. The only way to choose the right parameters is to put the payment model in place so the costs and savings can be determined.

The PTAC’s recommendations are just that – recommendations to the Secretary of Health and Human Services that the two payment models should be tested in Medicare. The decision to actually carry out that testing is made by the Secretary, not PTAC, and then the Centers for Medicare and Medicaid Services would have to carry out the work needed to actually begin paying practices differently. Hopefully, the Secretary will agree with the PTAC’s recommendation and CMS will quickly implement the limited scale testing process.

Health insurance is becoming more and more unaffordable every year and the rapid growth in Medicare spending threatens the long-term viability of the program. The only way to solve those problems is to deliver health care in different ways. It is clear that there are many opportunities to significantly reduce healthcare spending today without harming patients, but it is also clear that the current payment system is a major barrier to achieving those opportunities. When solutions to the barriers are developed, they need to be implemented as rapidly as possible. Moreover, the payment changes need to be implemented in collaboration with physicians to support truly win-win-win outcomes – better care for patients, lower spending for Medicare, and financial viability and professional satisfaction for physicians.

First Steps in a Truly Revolutionary Process

Project Sonar and the ACS-Brandeis Advanced Alternative Payment Model are just the first of what will hopefully be many new physician-focused payment models developed by physicians, not payers. Congress recognized that the current approach to developing alternative payment models wasn’t working well, and it created the Physician-Focused Payment Model Technical Advisory Committee so that physicians would have the opportunity to develop better approaches. When he was a member of Congress, Secretary Price supported creation of the PTAC, and he attended the PTAC meeting on Tuesday to say that he felt physician-focused payment is key to an accessible, affordable, high-quality healthcare system.

The very first payment models PTAC considered demonstrate the wisdom of this approach. The payment model proposals were developed by practicing physicians, who attended the meeting in person and described the problems they saw with the care patients were receiving today and the barriers to improvement created by the current payment system. Their proposals and presentations explained how care could be better and spending could be lower with the payment models and care changes they had designed. The physicians also demonstrated that doctors can actually be enthusiastic about implementing a well-designed alternative payment model; they don’t have to be forced into it or given “incentives” to use it.

Additional proposals for physician-focused payment models have already been submitted to PTAC and many more are in the pipeline. The PTAC is also revolutionary because all of these proposals are available to the public, and the public has an opportunity to participate in the PTAC review process from the very beginning. The PTAC only makes its decisions about a proposal after obtaining public input on the proposal when it is first submitted, and all of the PTAC’s deliberations about the proposal are conducted in a public meeting with opportunities for public comment on a draft report prepared by a subset of the PTAC members.